The Nifty succumbed to selling pressure for yet another session and closed at a six-week low on December 22, dented by Covid concerns and hawkish commentary in RBI policy meeting minutes. All sectors, barring IT, ended in the red.
The index started the day higher at 18,289 but lost all those gains in the initial hour itself. It remained under pressure the rest of the session and slipped to the day’s low 18,069. It ended 72 points lower at 18,127, the lowest closing since November 10.
The index formed a bearish candle on the daily charts, making lower highs, and lower lows. It took support at 18,050-18,100 and if the level gets broken in the coming sessions, the index can slip below the psychologically vital 18,000 mark. The level of 18,300-18,500 is expected to be the key hurdle, experts said.
For the Nifty, “18,050 would be the key support zone for the market and if the index trades above the same, it could move to 18,300-18,350 levels,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, said.
The dismissal of 18,050 can trigger further selling pressure and the index can slip to 17,950-17,930, he said.
With three straight days of correction, the Nifty’s trading range for coming sessions, as per the options data, has shifted lower to 18,000-18,300 from 18,000-18,500.
On the options front, the maximum Call open interest was at 18,500 strike, which seems to be resistance point for the next weekly expiry, followed by 19,000 strike, with Call writing at 18,200 strike then 18,400 strike.
The maximum Put open interest was at 18,000 strike, a crucial support area for the Nifty, followed by 17,500 strike, with marginal Put writing at 18,200 strike then 18,100 strike.
The volatility index India VIX was up by 2.4 percent from 15.56 to 15.19 levels. Volatility, which spiked to 16.30 during the day, has been going up for the last two sessions, reflecting weaker sentiment, experts said.
Banking index
The Bank Nifty opened positive at 42,864 but drifted towards 42,231. It moved in a zig-zag fashion throughout the day and closed 209 points down at 42,409.
The banking index formed a bearish candle on the daily scale, making lower highs lower lows, with supports gradually shifting lower.
“Till it holds below 42,750, weakness can be seen towards 42,000 and 41,750 levels, whereas hurdles are placed at 42,750 and 43,000 area,” Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.
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